Apple paid royalties to Qualcomm

Shareholders in Qualcomm breathed a sigh of relief after it was revealed that the fruity cargo cult Apple had been paying some of the money it owed for royalties.

For those who came in late, Apple has been trying to get Qualcomm to offer it a huge discount on its technology because it is Apple, and all must pay for the privilege of being its partner.

Shareholders feared that Apple had stopped paying completely as the lawsuits stated, but it turns out that Apple's contract manufacturers including Foxconn paid royalties, although they withheld around $1 billion from the undisclosed total amount due.

The amount withheld equalled the amount Qualcomm withheld from Apple last year under a separate agreement to cooperate on mobile technology that has since expired.

Qualcomm said it was unsure whether Apple's manufacturers would withhold any royalties owed during the current quarter. Apple declined to comment.

Apple, which sued makers of Android phones for patent infringement six years ago, filed a lawsuit against Qualcomm in January that claimed the mobile chip designer charged excessive royalties to use its technology and alleged that Qualcomm owed Apple $1 billion in rebates.

Last week, Qualcomm counter sued, saying Apple had violated agreements between the two companies.

Qualcomm CEO Steve Mollenkopf told analysts that his outfit had navigated challenges like this in the past and we have confidence in the sustainability of our licensing business.

“But we know these periods can generate added volatility in near term results and require open and regular dialogue with our investors."

Apple's lawsuit, and other regulatory probes worldwide, have spooked investors by challenging the heart of Qualcomm's royalty business model.

Qualcomm's royalty business brings in the lion's share of its pre-tax profits, or 80 percent in the most recent quarter, despite accounting for only about half the revenue brought in by its chip sales.

Qualcomm reported results for the first quarter of 2017, its fiscal second quarter. Adjusted revenue of $6 billion was up eight percent from a year earlier.

Analysts expect Apple and its manufacturers to pay at least a part of what they owe in the future.

Patrick Moorhead, president of Moor Insights & Strategy, said that the billion dollar cooperation agreement ended at the end of 2016, so Qualcomm wsa preparing for smaller payments in the next quarter and not zero payments.